Progress Energy Florida Makes Annual Nuclear Cost-Recovery Filing

ST. PETERSBURG, Fla., April 30 /PRNewswire-FirstCall/ -- Progress Energy Florida customers will see lower nuclear costs on their 2011 bills, according to the company's nuclear cost-recovery estimates filed today with the Florida Public Service Commission (PSC). The reduction is due to a decision by the company to postpone major construction activities on the proposed Levy County nuclear project until after the federal licensing is complete, which will lower near-term costs for customers.

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"Slowing work on the Levy project until we receive the license is the right decision for our customers and our company," said Vincent M. Dolan, president and chief executive officer of Progress Energy Florida. "In addition to lowering near-term price impacts on customers, the change in the construction timeline will allow for greater clarity on federal and state energy policies and will allow the economy more time to recover before the company completes major construction work on the project.

"The timeline extension also will allow Progress Energy to benefit from the experiences of other companies that are beginning to construct new nuclear plants in the next few years," said Dolan. "This will give us greater certainty regarding the price and the final construction schedule."

If the licensing schedule remains on track, the company expects the Nuclear Regulatory Commission (NRC) to issue the Levy combined operating license (COL) in late 2012. At that time, the company will update its assessment of the project and schedule to ensure that it continues to be in the best interests of customers and shareholders, considering the following:

• Public, regulatory and political support, including adequate cost-recovery mechanisms;
• Availability and terms of financing for capital;
• Participation of joint owners; and
• Total project cost.

"Building advanced nuclear plants will become increasingly important to Florida and the nation as we must reduce greenhouse gas emissions, strengthen energy security and support a growing population and economy," said Bill Johnson, chairman, president and chief executive officer of Progress Energy. "Our company will focus its near-term efforts on modernizing the power system and pursuing other elements of a balanced portfolio while looking to new nuclear capacity as a critical part of the long-term mix."

Slowing spending on the Levy project is a result of many factors, including:

• The need to reduce capital spending in order to meet the PSC's stated desire to avoid any rate increases in the short term;
• The recent downgrade to the credit ratings of Progress Energy Florida as a result of increased business risk due to regulatory decisions and economic conditions in Florida;  
• A delay in the licensing timeline;
• The current economic recession and its impact on customers; and
• Continued uncertainty about federal and state energy policies, including carbon regulation.

Today's filing includes estimated costs for 2010 and projected costs for 2011 for the proposed Levy County nuclear plant and the Crystal River 3 uprate project. Under state law, a utility can recover certain project-related costs – site selection, pre-construction, operations and maintenance and financing costs – over the construction period, following an annual regulatory review. Because of the impact the project has had on customers' bills, the company has spread certain costs over five years, which lowered the short-term impact on customers.

For 2011, the company is seeking to recover $164 million in nuclear costs, which includes the Levy plant and investments to increase production capability at the Crystal River Nuclear Plant. If the PSC approves the company's 2011 nuclear cost estimates as filed, the company estimates the average residential customer would pay $5.53 a month on a 1,000 kilowatt-hour (kWh) bill ($4.99 for Levy, and 54 cents for the Crystal River uprate) beginning with January 2011 bills. That is 21 percent lower than the $6.99 per month customers pay today on a 1,000-kWh bill ($6.78 for Levy, and 21 cents for the Crystal River uprate).

The proposed Levy County nuclear project is expected to generate about 3,000 construction jobs at its peak and 800 permanent jobs at the plant. Carbon-free nuclear power will further improve Progress Energy's fuel diversity. Floridians will benefit from up to $1 billion per year in estimated fuel cost savings once the nuclear units are in operation. The company also estimates savings of about $500 million per year in avoided carbon emissions.

There are many factors that will affect the total cost of the proposed Levy nuclear project. In addition to the cost of the plant, our current estimate of $17.2 billion to $22.5 billion includes land, transmission lines, fuel and financing costs. Once the company receives the COL, it will further refine the project timeline and budget, and it will make every effort to keep the price in the lower end of the estimated range. This is consistent with estimated costs of other, similar projects under development. However, today's filing includes an analysis of the project that demonstrates feasibility even with the more conservative estimate.

Examples of work being deferred until after the NRC issues the COL include design of the plant property and transmission lines, certain land acquisition for the transmission lines, construction of the barge slip and nuclear training facility, and clearing and other site preparation. Work to obtain the COL will continue, such as supporting the NRC's information requests during the review process.

Environmental permitting also will continue. Today, the company filed its required Wetlands Mitigation Plan for the Levy project with the Florida Department of Environmental Protection.

Progress Energy Florida, a subsidiary of Progress Energy (NYSE: PGN), provides electricity and related services to more than 1.6 million customers in Florida. The company is headquartered in St. Petersburg, Fla., and serves a territory encompassing more than 20,000 square miles including the cities of St. Petersburg and Clearwater, as well as the Central Florida area surrounding Orlando. Progress Energy Florida is pursuing a balanced approach to meeting the future energy needs of the region. That balance includes increased energy-efficiency programs, investments in renewable energy technologies and a state-of-the-art electricity system. For more information about Progress Energy, visit www.progress-energy.com.

Caution Regarding Forward-Looking Information:

This release contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements, by their very nature, involve assumptions, risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. For example, the company's decision on whether to move forward with nuclear generation construction will depend on a variety of factors that are each subject to change, such as the political and regulatory environments, financing options available to fund construction and the overall cost of nuclear generation construction and the associated transmission facilities. Any forward-looking statement speaks only as of the date such statement is made, and we undertake no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made.

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SOURCE Progress Energy